We are delighted to welcome renowned author and blogger Daniel Ivery to Forever Blues. Here, in a special feature, he takes us through significant latest news from Hong Kong and provides expert insight as to why all ties with the old regime could finally be cut soon.
When watching Tom Wagner exhorting Blues fans at the SToK Cae Ras to get behind the team in the second half of the Wrexham vs Blues clash on Friday evening, it’s not hard to think about just how far Blues have come under the Knighthead regime.
It wasn’t so long ago that it would be suicidal for a Blues CEO to spend his time among the hardcore Blues support – and the only free bar paid for by the ownership regime was more likely to be in a Wan Chai titty bar than an EFL Championship club.
Yet amazingly, the four letters HKSE that were the harbingers of doom for Blues fans still somehow have some relevance to those who are interested in the financial affairs of the club.
On Monday September 29, ZO Future Group – as Birmingham Sports Holdings are now known – published their financial results for the year ending June 30, 2025.
As one might expect, the company once again made a huge loss. However, buried within the forty-odd pages of accounts were a few teasing lines which give an insight into where Birmingham City are right now financially.
Revenue
You don’t have to listen to Tom Wagner for long talking about Blues for him to hammer home the importance of pushing the club’s revenues up.
After all, under the way the Profit and Sustainability Rules (PSR) are set up in the Championship increased revenues allow for increased spending without breaking the financial thresholds.
And based on the usual way football goes, increased spending increases the chances of success on the pitch.
The problem for those of us who want to see the accounting proof of the increases of revenue for the club is that there is no obligation in the UK for the club to produce accounts until nine months after the year end date.
However, Hong Kong listed companies are held to much stricter rules.
ZO Future Group (ZFG) therefore had until the end of September to produce their accounts for the last financial year – and because they still own 51% of Birmingham City FC, they have to include details of how the club did in those accounts.
One of the things ZFG have to show is how the “segments” of their company performed over the year, including things like revenues brought in and profit/loss made.
From this, we can see that Blues made HK$299.287M in revenue and a loss of HK$408.961M. In British terms this equates to about £28.75M in revenue and about a £39.1M loss
Now before anyone has kittens about how it doesn’t quite fit in with the narrative we’ve been given by Tom Wagner at this end, there are a few things we need to bear in mind.
Firstly, we can’t put too much stock in that figure in GBP because we don’t know how ZFG’s accountants have worked out the exchange rate.
There have been some wild swings in the value of the Hong Kong Dollar against the pound, and that could easily skew the exact revenue figure away from the one reported by Knighthead’s accountants here in the UK.
Secondly, there may be important differences in the way accounts are reported in the two jurisdictions which have affects in the way the numbers are made up. Without a view of both sets of accounts and a qualification in accountancy we should be wary of taking these figures as anything more than a ballpark figure.
In the management analysis, it’s confirmed that revenues climbed by nearly 25% in the last season compared to the one before; something that is a massive achievement bearing in mind the club were playing in a lower tier.
However, that same management analysis notes the huge loss made by the club, which has also risen by 44%.
The analysis continues with the following statement:
The financial performance of the Club remained unsatisfactory, the management is eager to work with Shelby to develop strategies and plans which can drive comprehensive improvements in the Club’s overall performance.
Now that might be a statement to save face in front of shareholders or it could be a veiled dig at Tom Wagner and co that ZFG think they could actually do a better job.
Regardless of which, it’s a statement which is almost comical bearing in mind the things Blues have gone through in the last fifteen years or so and it leads to a much more important question:
When will Knighthead take full control of the club?
A future without ZO Future Group
When Knighthead took operational control of Blues in July 2023 via their Shelby Companies Limited vehicle, there was always the question as to when Tom Wagner and co would come back for the remaining 51% rump of shares.
There has never been a firm date as to when this would happen, but the hope has always been from Blues fans that it would be sooner rather than later.
With over two years having elapsed since the original deal was done, most of the Hong Kong stuff has faded into the background and almost forgotten about.
After all, actions are more powerful than words and all the actions since that fateful date in July 2023 have confirmed that Tom Wagner is very much at the wheel of the club.
However, it wouldn’t be beyond the realms of reasonable thought that Knighthead want to completely sever the connection with Hong Kong as soon as possible.
In the past there are two things that have held up the process of removing the club from the Hong Kong holding company.
Firstly, it’s imperative to ZFG that they hold onto their listing on the main board of the Hong Kong Stock Exchange.
Secondly, there needs to be a financial package that is acceptable to ZFG in return for their shares in the club.
After two years, it looks like things might have evolved to a point where both parts of the equation can be dealt with.
The plan for Knighthead was always to take the remainder of the club via debt leverage. ZFG are now massively in hock to Shelby due to the loans made to maintain financial operation of the club, and the only way ZFG can pay those back is to swap their equity in the club for the debt.
What helps the situation is that ZFG doesn’t have as much of a crippling need to hold onto the club to maintain their stock listing as they have had in previous years.
In the past, 95% of the group’s revenue was made up by monies brought in by the club. As of these accounts, the figure is down to 75% – thanks in main to the new electrical vehicle business ZFG have built up.
That should be enough for Knighthead to finally pull the trigger and take on the remaining 51% of the club before the end of 2025 – and finally to consign those letters HKSE to the annals of Birmingham City history.
